Tom Lenard:
Hello and welcome back to the Technology Policy Institute’s podcast, Two Think Minimum. It’s Friday, March 15th, 2024. I’m Tom Lenard, President Emeritus and Senior Fellow at TPI. And I’m joined by my colleagues, Scott Wallsten, TPI’s President and senior fellow and senior fellow, Sarah Oh Lam. Today we’re delighted to have as our guests Ginger Jin and Liad Wagman to talk about antitrust and more specifically the Federal Trade Commission, where both of them worked, Ginger as director of the Bureau of Economics from January 2016 to July 2017 and Liad as senior economic and technology advisor from 2020 to 2022. Ginger is currently a professor of economics at the University of Maryland. From January 2019 to May 2020 she was on leave at Amazon as an Amazon Scholar and Senior Principal Economist.
Liad is currently Dean of the Stuart School of Business at the Illinois Institute of Technology and effective June 1st will be Dean of the Lally School of Management at RPI, the Rensselaer Polytechnic Institute. Congratulations on your new appointment, Liad.
Liad Wagman:
Thank you.
Tom Lenard:
And welcome Ginger and Liad to the podcast. Each of you worked at the FTC at different times. Both of you I think experienced a transition working under chairs from different parties. Ginger, you started with Edith Ramirez, a Democrat, and then worked for a time under Maureen Ohlhausen, a Republican and Liad, you started under Joe Simons, a Republican and continued for a while under the current chair, Lina Khan. Perhaps each of you can start by briefly talking about your experience at the FTC, and what your general view and impression of the agency was at the time that you worked there. Let’s start with you Ginger.
Ginger Jin:
Thanks so much for having us. I was actually on sabbatical leave at the Federal Trade Commission in the second half of 2015, it just so happened that it was my sabbatical year and I had to be local. I should clarify that most of my research is more related to consumer protection than to antitrust. I was there only hoping to work with FTC officials on consumer protection-related issues. It turned out that they were interested in me taking the bureau director’s position, starting the beginning of 2016. That really opened me to both the consumer protection issues as well as antitrust issues.
I had the honor to work with many career economists and lawyers, commissioners, and Bureau directors in the Competition Bureau and Consumer Protection Bureau on many questions, covering both parts of the House. I really appreciate that experience. It’s very educational for me. After that, the experience did make me think more about antitrust issues. I have written a few articles about antitrust, some with Liad, some with other people. I really appreciate that experience.
Tom Lenard:
I worked at the FTC very briefly years ago, basically for about six months. This will obviously date me, when Jim Miller was the chairman. But it is a very intellectual place overall compared to other government agencies.
Ginger Jin:
Oh, definitely. It’s almost like an academic department. In the Bureau of Economics, we have 80-plus PhD economists. Many of them are very active in research, not just case-related research, but also research publishable in academia journals.FTC Bureau of Economics and other bureaus have constantly organized conferences to learn from and contribute to academic literature. I very much feel it’s an intellectual place. It’s also eye-opening for me as an economist to learn more on the legal side, especially how non-economists have been thinking about consumer protection and antitrust issues.
Tom Lenard:
Liad, do you want to talk about your experience there and your general impressions of the agency at the time?
Liad Wagman:
Yes, I share a lot of Ginger’s respect for the agency and impressions from it. It was really eye-opening for me to see how attorneys treated issues that I perceived as economic issues. It was nice to learn from their perspectives. I joined the Office of Policy Planning under Joe Simons and Bilal Sayyed in the beginning of 2020. We’d begun conversations in 2019 and as you know, the pandemic caused massive changes in March 2020, and the agency quickly went to fully remote. There was a whole other aspect to the experience, seeing the changes from 2019 and earlier when I went to the agency to provide testimony at hearings and other activities to how the agency transformed into being fully remote during the pandemic. Of course after the election, I also served under acting chair, Rebecca Slaughter, for a time, and then under Lina Khan for several more months before I left in January 2022.
My experience was more uniform, between chair Simons and acting chair Slaughter. And then it changed with the many changes that Lina Khan brought to the agency. It was most jarring in the beginning when there was a moratorium on participating in conferences or in advocacy. Those were ultimately relaxed with time, but I think some of the changes caused a little bit of the staff, the career staff especially, being shell shocked and not to be able to do what they used to do. That’s just the high-level things. Overall, it was just a great experience to be able to participate in the activities of the agency, including with the Bureau of Economics, Bureau of Competition and Consumer Protection.
And also within the Office of Policy Planning, we took on some studies under Section 6B of the FTC Act that enabled us to do things that were massive in scale, just aspirational, but were still informative. One of those studies was on the acquisition activities of the five largest technology companies at the time, over the past decade, from 2010 to the end of 2019. That was pretty insightful to see the capabilities of the agency and the teamwork of economists and lawyers and paralegals and technologists to pursue a very large project and see it to fruition and ultimately be able to share a little bit of the results with the public as well. It was a great experience.
Tom Lenard:
Yeah, maybe we can get into that because I know that was an important study or maybe we can get into that in a little more detail later. But I’d like to start out with, this podcast will generally just focus on this paper that both of you have written titled Preserving the Institutional Value of the FTC in the Digital Era, that is available on the TPI website if any of our listeners want to get to it. But it’s an overall, it’s a big picture. It’s got a lot of detail in it, and it’s also got a lot of big picture stuff in it. And it’s a very interesting paper. It basically focuses within the broader context of the FTC’s history – it focuses on the current FTC. Who wants to go first? You can talk about what you think the major takeaways are from that paper. Do you want to start Ginger?
Ginger Jin:s
Sure, I can start. I guess we wrote that piece to try to reflect what happened in the past few years. FTC has gone through a lot of changes both institutionally as well as in the content-side in terms of their activities. As FTC alumni I was always proud of being part of FTC and have seen really talented people there doing very valuable work. I still believe that the FTC has a very unique position to make a very unique contribution as a government agency and public institution to the digital era. For one thing, I think the FTC is unique as a bipartisan, more than 100-year-old agency that has a dual mission in both antitrust and consumer protection. The digital era might be a very prime example where these two paths could actually intertwine in a very important way for the whole society. In that sense, FTC has a very unique position, and could make a lot of contributions in this area.
I am not just saying that because they can bring blockbuster cases in the court as a litigator, but also because they can be a thought leader as to how society should think about these issues as consumers face challenges of say on the one hand they want to get a lot of valuable products and services from digital suppliers; n the other hand, they may be concerned about their privacy issues in the digital data. The FTC seems a natural fit to deal with that kind of challenge when antitrust and consumer protection naturally intertwine with each other. That’s one of the motivations to write this article. People are free to check out the article, to read the details.
I think the main message [of the agency] is it wants to reflect on what has been done in the past, maybe decades, and see what went well, what went wrong, and how we can improve that system.
I’m all in for that, but I hope that can be done in a more systematic way. For example, if you’re thinking, okay, consumer welfare standard may need some reform, let’s ask exactly where that standard was wrong, why it’s wrong, how can we fix it? I was hoping the FTC can be a solid leader in providing a coherent, overarching framework on that, if the whole society wants to reflect on that issue and have a better, improved framework to address the future challenges in the digital era. That was my hope for the FTC reform. Unfortunately, I see some action towards that direction, but probably not as comprehensive and as fast as I had wished.
Tom Lenard:
Liad, you want to-
Liad Wagman:
Yes, totally in agreement with Ginger’s statements. I think we’ve had a number of works in the broader space of antitrust and consumer protection, and I think this paper ties some of them together to provide an overarching commentary on the recent developments at the commission. I think that the commission is just immensely impactful on the American and the global economy and every little action that it takes can have massive consequences, some intended, some unintended, and it’s just crucial to apply the economic lens to the decisions and ensure that they’re leading to a desired outcome. I think that applies at least in the paper, primarily in the technology context that’s fast moving and has been our focus in a number of other papers. We shed a specific light on the technology context and the agency’s actions in that context in recent years.
Tom Lenard:
Well, it’s not a secret that the current chair, Lina Khan, came in wanting to shift course quite dramatically. She didn’t make any secret about that. I mean, I don’t know who, I think she probably as well as her counterparts at the DOJ have said that the last 40 years of antitrust had been a failure and she is trying to correct that. Within that, first of all, do you think we need such dramatic correction or just more minor corrections? And secondly, how successful do you think, talk about how successful you think the current leadership is going to be at transforming antitrust enforcement. We hear a lot more about antitrust enforcement rather than the consumer protection side, and you don’t really write about the consumer protection side in your paper. You talk about the administrative actions and you talk about the cases and the way I like to segment your paper and then you talk about the more general reputational aspects of the FTC. Talk about whichever one of those you’d like to talk about first.
Ginger Jin:
I can talk about the big picture. I feel that, as economists, we want to appreciate a more balanced view of benefits and costs of agency actions. For example, in the draft and final merger guidelines just published last year, there are a lot of “could” and “may”. In theory, it’s probably not hard to write out a theoretical model saying that certain theoretical possibilities could happen under certain conditions. But to move it into practice, we have to consider how likely that might be. What’s the consequence if this turns out to be a false positive? To what extent will it deter innovations or even lessen the competition because of the action? I want to see a more balanced benefitcost analysis in the actions such as antitrust cases or rulemaking or some proposal of merger guidelines or HSR reporting criteria.
I think we can have a very long list of potential costs and benefits for every action here. verall, a balanced view will be a better approach than we go for a particular direction, assuming that is correct, and sometimes even with a very explicit presumption, and then just say, that’s okay, we’re going that direction, if other parties want to go against it, you can raise your hand and rebut it. I think that for such an important agency trying to benefit American society in the digital era, some inherent benefit-cost analysis is really necessary.
Liad Wagman:
I was just going to add, I think this has been a jarring change. There’s less reliance on such cost-benefit analysis under chair Khan. That used to be the precursor to changes. The commission would hold workshops, it would gather input from the community, it would rely on the economics literature to inform its cost-benefit analysis. And that has been moved to the side, at least that is my sense of this.
Tom Lenard:
Do you think the role of economics in general has been moved to the side or not?
Liad Wagman:
There are attempts to do so. At least that’s my sense of things. Some of it is reflected in the new merger guidelines. Some of it is reflected in the way that proposed rulemakings are conducted with a certain approach that omits specific steps that used to be taken in order to gather that sort of input. An example is the non-compete rulemaking, which does not take into account the extent of economic literature and making leaping changes with various potential consequences. Again, without taking into account the cost-benefit analysis.
Scott Wallsten:
Let me ask you a question that’s a little bit unfair possibly because it’s so speculative, but Trump is well known for his total disdain of any existing institution if it’s not something that benefits him, and it might be, it’s a little extreme to compare what’s happening at the FTC to that, but is it part of a trend of not understanding the importance of the stability of our institutions and the history and their foundations and how they became what they are if it doesn’t match exactly what you hope to do? Obviously that’s an incredibly leading question and not exactly a fair one, but does that ring true to you or not? I mean, is there hope to reverse this, I guess, maybe is the more optimistic way to put it.
Liad Wagman:
I would say good news is that the commission is at least moving from being entirely majority commissioners, at least based on recent reportings, and moving towards having the minority commissioners appointed as well. That’s good news, but I would just point out that at least as far as the FTC is concerned, from my perspective, having worked under two administrations from opposing political parties, this trend is not unique to any one party.
Ginger Jin:
Another example is, if you compare the draft merger guidelines and the final merger guidelines, I think it’s a good sign that the final merger guidelines look more balanced and have more writings, and also acknowledge some economic literature. That may be a result of having the draft merger guidelines available to the public. It actually received many, many public comments, and not only those get filed at the FTC website or DOJ website, but we also know a lot of professional conferences, a lot of professional panel discussions have people talking about the pros and cons in the draft merger guidelines. I think that speaks to the strengths of having multiple voices. This is a democratic process where different mindsets contributing to the same question would help us arrive at a more balanced work product and avoid maybe unnecessary uncertainties if people just go with one direction until somebody else protests.
That’s a very costly way for the whole society to figure out what’s right and what’s wrong. It could be very costly to the agency, it could be very costly to the businesses or parties that got questioned by the agencies, and also very costly for even average consumers like you and me, if we have to resolve things by say, the district court says this and that’s pushing back the plaintiff or the defendant, and then the appeal court says something different, and the Supreme Court would come in maybe years later to have their opinion, and then the case goes back to district court. The time costs, the monetary costs and also the intellectual costs we’re paying in that process are, in my opinion, probably unnecessary. We already have an institution to facilitate public comments, to really have an open debate, and to try to drive to a work product that’s more balanced even before we put that into action.
Tom Lenard:
At the time you wrote your paper the guidelines had not been finalized, so you were commenting on the draft guidelines and you particularly singled out the treatment of potential competition as problematic. Was that fixed in the final version?
Ginger Jin:
I would say probably going in the right direction, but not to the full extent as I would prefer. For example, in the draft merger guideline, there was language like this is presumed anti-competitive or something like that. That kind of language has been struck off the final merger guidelines, but the list of what they called objective or subjective evidence for potential entrants stay [in the final guidelines]. I think the mindset is still there. I wish that mindset had more balance in terms of benefit-cost analysis than just saying, here’s the direction we’re going.
Tom Lenard:
This might also be related to the study, the GAFAM study I think that we were referring to earlier. Do you want to talk about that and how that may relate either to the guidelines or the overall approach towards mergers?
Liad Wagman:
That particular study, we looked at five firms, Google/Alphabet, Apple, Microsoft, Amazon and Meta/Facebook. We looked at their acquisition activities over the ten years from 2010 to the end of 2019 and basically looked very, very deep into their acquisitions. Each acquisition had over a hundred questions linked to it that the respondents had to complete, and it included questions that had to do with the parameters of the transaction, but also what became of the acquired product or service. It didn’t just focus on acquisitions in the sense of acquiring majority shares in a company, but also minority acquisitions, board rights, and various other transactions like that. And there was a team that was working on this-
Tom Lenard:
This included maybe even focused on non-reportable acquisition.
Liad Wagman:
Yes, it focused on non-reportable acquisitions. Yes, good point. Thanks Tom. It focused on non-reportable acquisition transactions that would not have been filed to the agencies, to the FTC or DOJ, under the Hart-Scott-Rodino Act. So these are non-reportable. That means usually they meet some sort of an exemption. Either they’re relatively small in size or they have some other exemption. For instance, they don’t have enough of a nexus to the United States. They don’t meet other tests. And the vast majority of these transactions were relatively small. We’re talking less than $50 million. There were some that were larger. The size of transaction exemption under the Hart-Scott-Rodino Act can go for some transactions in recent years almost up to $400 million. Some transactions could be close to the $400 million range, which is not necessarily small, but they might still go unreported. There weren’t that many such transactions in that range, relatively few.
The point of the study was to look at these transactions to see if the agencies are missing out on something important by not having those transactions be reportable to the agencies ahead of the merger taking place. The output that was published from this study didn’t really touch on that. It had some summary statistics of the transactions. It did have some conclusions, in the sense of whether there were potential loopholes used for non-reporting. For instance, if certain debt was taken in order not to report [the merger] or extraordinary dividends were issued, or the key employees or the founders of the acquired companies received some contingent pay after the acquisition was consummated. And it didn’t seem that those affected a large percentage of transactions, based on the public report. That was the public output. But since that study came out, Ginger and I and another co-author of ours, Mario Leccese, worked on a number of papers in this space that looked at data that’s available from databases like Refinitiv, S&P, Crunchbase to
Tom Lenard:
Can I ask you a question? Can I ask you, I don’t mean to interrupt, but I was just curious because the study started out as this is more of an Institutional question about the FTC. So the study started out under Joe Simons as I-
Liad Wagman:
That’s right.
Tom Lenard:
And then was released when Lina Khan was the chair.
Liad Wagman:
It was released in the summer of 2021. It was voted out unanimously, yes, Lina Khan was chair at the time.
Tom Lenard:
That transition, would you say that transition affected or did not affect the final product that was released?
Liad Wagman:
Well, I don’t have the counterfactual, so I don’t know what would’ve been released if Joe Simons was still chair.
To continue on, we went on to study similar environments, the same 10 years of acquisition activity using data that are available through databases that anyone can access with a license. And we did what the FTC study didn’t do, which is put the acquisitions by the five large technology companies in context, in the broader context of the technology space. And we obtained results there that one would’ve hoped the FTC would’ve provided but did not. Some of those results go into the benchmarking of acquisitions by those large technology companies against other leading technology companies and the potential impact of those transactions on competition or entry into a business area by other technology companies.
Tom Lenard:
So the data that the FTC gathered through the 6B processes is not publicly available, and you couldn’t use it after you left the agency, right?
Liad Wagman:
That’s right. The study that the agency is able to release under the 6B [framework] is anonymized. It doesn’t show firm-specific information. It can aggregate across firms to show aggregate data and aggregate patterns, but not firm-specific information.
Tom Lenard:
How would you say either the result of 6B study or the result of the studies that you did afterwards based on the public databases, how should they inform merger policy?
Liad Wagman:
I think it’s nice to point to maybe a specific case. Let’s look at, for instance, the FTC and the Meta/Within transaction as an example. Focusing and zooming in on that case in particular, it is interesting to me that the agency pursued a transaction in a technology area where the primary form of exit is through an acquisition and targeting such a transaction can have ramifications for innovation in this space in the first place because entrepreneurs, investors may choose not to get into something where the primary form of exit, we’re talking about a ratio of something along the lines of 32 acquisitions to one IPO, is being foreclosed, is being shut down through regulatory efforts like the FTC pursued in the Meta/Within acquisition.
It was of concern because we want to encourage innovation, we want to encourage entry. These are things that are positive for markets, for competition, for consumers. And regulatory actions such as this particular one could risk innovation and entry for relatively little gain. That was my opinion of the case. It’s just an example, and the results from the papers support that acquisitions, for instance, by the leading technology companies in a particular business area, do not necessarily disincentivize other incumbents from also acquiring in the same area and entering through acquisition into that area. And in fact, the results show that competition among those large technology companies has been increasing over time, both in terms of competition within that group of GAFAM firms, but also between GAFAM and other large technology incumbents.
Ginger Jin:
If I can complement Liad’s description of that paper, let’s we zoom out to the big picture. I understand why the agency and the media focus on a handful number of big companies. However, if you look at the whole universe, maybe I shouldn’t say the whole universe, at least the big chunk of tech acquisitions as we can capture in the public databases, the GAFAM acquisitions only account for less than 2% of tech acquisition deals in those data. We see a lot of other acquirers, some of them are very big, like AT&T or Verizon, some of them are relatively small. But our point is that the whole space of tech acquisitions is much broader than just the corner of GAFAM acquisition as the Section 6(b) study has described. And if you’re talking about the incentives of entrepreneurs, as Liad described, their exit strategy counts much more on M&A than IPOs.
And this is more so over time as documented by the finance literature. At the same time, the R&D has been moved from big enterprise labs such as the Bell Lab to smaller startups funded by venture investors. If you look at that ecosystem, being able to do R&D based on venture investment, and being able to have an exit strategy through M&A is crucial for their incentive to start a business in the first place. With that background, if you look at Guideline #4 in the Merger Guidelines, which targets potential entrants, it has a list of objective or subjective evidence. It is saying that, okay, if you have been operating in an adjacent area, you may be a potential entrant; if you have considered entering, even if you may have concluded that entry is not the right way to do it, you may be considered as a potential entrant.
With the list of evidence, that guideline suggests that any merger involving those potential entrants might be anti-competitive. However, for a startup that is, let’s say, competing with a big incumbent, maybe they’re counting on M&A as a strategy for them to exit and for them to have the incentive to exist in the first space. And from the future acquirers’ perspective, maybe this is an effective way for them to enter into a place to really compete with another big incumbent, so that we can intensify and promote competition in that area. These are all potential pro-competitive benefits of such M&As involving potential entrants.
Going back to my point that we want a balanced view of seeking potential benefits and potential competitive harm in this area, and we want to do a thorough benefit-cost analysis somehow, especially if we want to have a rule of thumb saying that’s exactly what action you want to have in this area. If you want to encourage innovation, you don’t want to minimize the entrepreneur’s incentive to innovate in the future market. The guideline, as is written right now, even in the final version, runs a risk of countering that incentive. hat’s one place I wish the final guideline had revised.
Liad Wagman:
Right, and Ginger is touching on another paper we wrote that explores who acquires startups, who acquires these young technology companies across the economy. We found that companies across sectors from manufacturing to trade and so on, acquire technology companies at times as a way to differentiate their products and compete more effectively. It’s not something that is specific to, say, the information sector. These kinds of acquisitions are something we see across sectors of the economy. I think it goes to Ginger’s broader point about cost-benefit analysis.
The agency has taken some actions, whether it’s through court cases like the Meta/Within case or by withdrawing the vertical merger guidelines so quickly after they were released and releasing new guidelines that depart from certain agency practices and approaches to the guidelines in recent years. These actions create uncertainty in the marketplace, uncertainty for acquirers, uncertainty for entrepreneurs, and uncertainty for investors, and that can lead to unintended consequences for the marketplace that can be detrimental. And those costs have not been looked at either through a cost-benefit analysis lens before the agency takes certain actions.
Tom Lenard:
Let me add, just to conclude the discussion, although this probably opens up a much broader discussion, but let me just read a quote from your paper that I think is what you wanted to leave readers with. It says that the FTC could “serve as a thought leader in substantive”, I think you’re suggesting they’re missing this opportunity, but they could “serve as a thought leader in substantive antitrust reforms. The agency could do so by one, initiating a much-needed technological overhaul and digital transformation to serve as a model for all government agencies, particularly antitrust agencies, and two, leading a productive public discussion on how to modernize antitrust enforcement to be more consistent with the vibrant digital economy.” That may be the message you wanted to leave in terms of what the FTC could do on a positive, or you hoped the FTC could do on a positive note. Do you want to maybe just expand a little bit on what you mean by those specific suggestions?
Ginger Jin:
I feel like the FTC is a rulemaker or regulator in the whole economy, including the digital economy. It seems a no-brainer that the agency should know what’s going on in the field. However, from my personal experience and maybe from Liad’s experience as well, the agency is really left behind, technology-wise as well as intellectual-wise, in terms of what’s going on in the field. Our paper, the paper we just discussed about acquisitions, is only one aspect of what’s going on in the venture investment market. There are many other aspects in the digital economy: for example, exactly what technology has been used by big and small digital firms, how they use them, and to what extent we have algorithms involved. The field is moving so fast given today’s technology but the technology toolkits that agencies like the FTC use are still in the old traditional world.
They’re still getting data case-by-case through the CID or case investigation. .And they got the consumer complaint reporting system. Those reporting systems are not being monitored in real time to give clues on what new violations are happening in the real field, or what cases should be quickly brought out to reflect those complaints. These are examples I feel that, as an agency who tries to regulate or lead the digital economy, they really need the technology toolkits to understand the market first and then use a benefit-cost analysis to decide what are the most productive directions to go.
Liad Wagman:
The FTC has a huge opportunity to generate data on consumer protection and antitrust issues and provide this data more broadly to the research community to advance the discussion and do meaningful analysis. For one reason or another, it has not gotten to that point, but that opportunity remains there and can be tapped. That is one of our points here.
Ginger Jin:
And not only on data collection and data dissemination. FTC could even operate as a platform. You could have the industry practice as one hand. You could have academic researchers as another type of user. You could even have policymakers including and not limited to antitrust agencies as the third type of user. All these parties could be interacting in terms of having a better understanding of the economy and also the knowledge, let’s say accumulated by academia, could be very useful to the policymakers, and the questions that policymakers see in the field but do not have the resource to address could be addressed by academia researchers or think tanks like you guys. The FTC could play a role trying to connect those thoughts together and organize the intellectual thoughts and advances from different types of players in the society. They could have done more in that opportunity.
Tom Lenard:
I mean, they now have more money, so they could do more of what you’re suggesting because that costs money.
Ginger Jin:
Yeah, of course. To their credit, the FTC Bureau of Economics will actually hold a conference on public policy and marketing; it is co-organized with me and K. Sudhir of Yale’s marketing department. That’s one effort where we could bring academia and public policy makers together to look at the marketing literature, and the information economics literature to address public policy issues. And in terms of resources, it actually does not cost that much for this kind of conference. [For FTC,] it’s probably just that we use some conference room in the FTC and have such a conference announcement on the FTC website.
We could attract academia from not only the US but also Europe and other parts of the world to really look at the questions. I mean, what’s the cost for the FTC if they can define a list of questions that academia should look into? They don’t even need to really provide very detailed transaction level data to the researchers. Often academic researchers want to contribute, they even want to have their own resources to answer interesting questions to policymakers if those questions could be well-defined by policymakers. So again, I feel like there is a lot of complementarity that could be led by an agency like FTC to really synthesize those thoughts and put them to a good use.
Sarah Oh Lam:
In your paper, you mentioned that the digital economy is 10% of GDP now according to the Bureau of Economic Analysis from 2021 and growing at around 10% as well. It seems like most of the economy has a digital component, but for it to be a purely digital economy, 10% is a lot. Do you think that the FTC is currently trending European? I know that you’ve both done a lot of work on European regulation and there have been news reports like, chair Khan is meeting with the EU regulators a lot. Is that one way to interpret what’s happening at… Could the FTC in a different world take a more American approach? Are they going more of the European approach with the digital economy?
Liad Wagman:
I don’t know that we’re taking a European approach. I think that might be up to Congress to decide rather than the FTC, but certainly there are questions of mutual interest concerning the digital economy. And Europe has been moving forward with some laws like GDPR, DMA, DSA and the recent AI Act much quicker than Congress has. That does have some implications for the FTC. For instance, the FTC might explore using rulemaking as a way to advance certain priorities. It’s really not ideal though. That really should be something that Congress pursues in order to more wholly represent the interests of the American citizens.
Ginger Jin:
Well, one positive impact out of the recent FTC actions is that it does generate a lot more attention to antitrust reforms, digital economy, and how the traditional framework of antitrust may not be the perfect fit for today’s digital economy. That’s a positive factor. It does motivate a lot of academic researchers from economics, from business schools, from many other disciplines, even including computer science, to look into those issues. That’s a good thing. Hopefully, that could be good inputs into the eventual benefit-cost analysis at the Congress, for example.
Tom Lenard:
I think we probably have gone over the amount of time that we had promised we would take from you guys. And really, this has been a very interesting discussion. Your paper is very interesting. Let me repeat the title for our listeners. It’s called Preserving the Institutional Value of the FTC in the Digital Era, and it is on our website. It’s going to be published in a forthcoming issue with a few other papers in the Review of Industrial Organization. And thank you very much. We appreciate your taking the time to be with us today.
Liad Wagman:
Thank you very much.
Ginger Jin:
Thank you so much for having us.
